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OPEC and non OPEC oil producing countries jointly adjust production again

OPEC and non OPEC oil producing countries jointly adjust system detection production again

June 25, 2018

[China paint information]

on June 23, after discussion, the organization of Petroleum Exporting Countries (OPEC) and major non OPEC oil producing countries, including Russia, decided to appropriately increase crude oil production from July to promote the balance of market supply and demand, This move is expected to increase the daily supply of international crude oil market by nearly 1million barrels in the second half of the year, but it is still slightly lower than outside expectations. Analysts pointed out that although all parties finally reached a compromise on increasing production, the internal cracks in oil production hindered the possible substantial adjustment of production. In the context of the recovery of demand in the international crude oil market, this increase in production is unlikely to change the trend of tight market supply

On June 22, OPEC held a meeting at its headquarters in Vienna to discuss the next stage of oil production policy. At the meeting on the same day, OPEC member states and non OPEC major oil producing countries discussed that crude oil production should be appropriately increased to promote the balance between market supply and demand. It is reported that OPEC member countries will increase crude oil production by about 600000 barrels a day, while non OPEC oil producing countries will fill the remaining gap, with a total daily increase of about 1million barrels

this is the fourth time that OPEC and non OPEC oil producing countries have coordinated to adjust production. The coordination mechanism is gradually maturing. After the meeting, both sides expressed their recognition of the efficiency of the mechanism. In the future, it may become normal for both sides to adjust production in a timely manner according to the situation

OPEC and Russia and other non OPEC oil producing countries reached an agreement to reduce the average daily production of about 1.8 million barrels of crude oil at the end of 2016, raising the price that once fell to $30 per barrel to more than $70. This year, the oil price hit $80 per barrel at its peak. The production reduction agreement is scheduled to expire at the end of this year. On May 8, the U.S. government announced its withdrawal from the Iran nuclear agreement and ordered the resumption of sanctions against Iran suspended due to the agreement, which raised concerns about the shortage of crude oil supply in the market

Before the meeting, US President trump expressed the hope that OPEC could substantially increase crude oil production. Worried that oil price fluctuations are not conducive to the mid-term elections of the US Congress, the trump administration has intensified its lobbying efforts and privately pressured Saudi Arabia and other OPEC member states to increase production in order to make up for the possible interference caused by the reduction of Iran's crude oil production in the future. However, according to the results of the meeting, the increase in production was smaller than expected. Some analysts pointed out that the increase in production was to offset the previous excessive production reduction, so as to maintain the production reduction agreement between OPEC and non OPEC oil producing countries

in the past few months, oil producing countries such as Venezuela and Libya have also experienced unexpected supply shortages, resulting in a daily production reduction of about 2.8 million barrels, exceeding the production reduction target. Since June, Iran's crude oil exports have fallen sharply. At the same time, Venezuela's crude oil production is far lower than the production capacity in the 2016 production reduction agreement. Our company specializes in the production of universal testing machines, tensile testing machines, pressure testing machines, impact testing machines, and other product standards, and is expected to decline further in the next few months. The International Energy Agency predicts that Venezuela's daily crude oil production will fall by hundreds of thousands of barrels by the end of this year. The current crude oil output of Iraq is also lower than the production limit of about 4.325 million barrels per day stipulated in the OPEC agreement

this increase in production is a correction for excessive reduction in production, and has not achieved a substantial increase in production. Therefore, after the conclusion of the OPEC meeting, the humidity of many other materials may play a very important role in mechanical properties, and the international oil price even rose slightly

internal differences hinder substantial production increase

after nearly 18 months of production reduction and the recovery of the international crude oil market, the current oversupply situation in the crude oil market has been significantly improved. According to the data of the International Energy Agency, the international commercial crude oil reserves fell significantly, meeting the OPEC's expectation of reducing production, and the commercial crude oil reserves of the organization for economic cooperation and development fell to the lowest level since 2015. Saudi Arabia's minister of energy, industry and mineral resources Khalid Falih warned that the international crude oil market may face insufficient supply in the second half of this year

in the face of external calls for OPEC to increase production, Saudi Arabia once proposed the goal of increasing OPEC's production by 1million barrels per day before the meeting, but it was opposed by Member States led by Iran. Although all parties finally reached a compromise on increasing production, the statement after the meeting did not clarify the specific implementation plan, that is, the sharing ratio of Member States to increase production, because differences and contradictions still exist

at present, Russia and Saudi Arabia basically agree to gradually withdraw from the production reduction agreement, and recently hinted that the production may be increased ahead of schedule. Judging from the recent data, Russia has begun to increase production, and its crude oil production reached 1.1 million barrels per day in early June. Saudi Arabia hopes to increase production slightly, so as to prevent the oil price from falling too much, affecting the interests of oil producing countries. It is natural for countries with strong oil production capacity such as Saudi Arabia to increase production, but it is obviously unfavorable for countries with insufficient production capacity such as Iran, Iraq and Venezuela

"Middle East" analysis said that at the OPEC meeting, Saudi Arabia and Iran "hold their own views and do not give in to each other, making the oil filled with a strong political color", which is also an epitome of the differences within OPEC at present

for the future trend of international oil prices, experts who are bearish on oil prices believe that there is a great possibility for OPEC member countries to increase production in the second half of the year. At the same time, with the increase in shale oil supply in the United States and the drag on demand caused by high oil prices, oil prices may fall under pressure in the future. Experts who are bullish on oil prices believe that the global oil inventory has fallen to the lowest level in five years, while most OPEC countries have now produced crude oil at full speed, and the space and room for further production increase are limited. OPEC production increase cannot offset the impact of crude oil production reduction in Venezuela, Iran and Libya. These factors will boost oil prices in the future. China's energy strategist Lu Ruquan believes that the global economic situation is improving, the possibility of increasing or decreasing shale oil production in the United States, and the agreement on increasing or reducing production reached between OPEC and non OPEC will become the "new triangle" that determines the trend of international oil prices at present and in the future

OPEC's recent market report believes that there are still many uncertainties in the international crude oil market in the future. Under the pressure brought by shale oil, OPEC's own market pricing ability has significantly decreased, and it is increasingly difficult to deal with the complex situation of the international crude oil market alone. Therefore, it is necessary to carefully determine the market strategy and jointly deal with the new market changes with non OPEC oil producing countries led by Russia

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